I am a reporter and researcher focused on energy, political and economic issues in the Mediterranean and have spent much of the last fifteen years working and reporting from the region. Over the last several years, my work has focused on all facets of the energy sector, including investment, development and policy issues. I am a graduate of the University of Texas’ School of Journalism and New York University’s Center for European and Mediterranean Studies graduate program. https://twitter.com/coatschristophe

Unrest Not Enough to Shut The Door On Libyan Oil

A Libyan oil worker from the Libyan National oil and gas company walks at the the Zawiya oil installation on August 22, 2013 in Zawiya, Libya. Libya's National Oil Company announced a resumption of exports from the Brega terminal in the east, allowing it to partially lift from Thursday a declaration of force majeure. But the Zueitina, Ras Lanuf, Al-Sedra terminals remained blockaded by striking security guards in a dispute over allegations of corruption in oil sales. (Image credit: AFP/Getty Images via @daylife)

As Libya’s energy sector goes, so goes the country.

For a country so deeply dependent on energy production for nearly every aspect of political and economic stability, the news of the last few months has been worrisome, to say the least.

The country looks to energy revenue for a “lion’s share” of its income and its ability to meet its annual budget of about $54 billion.

After rebounding beyond all expectations in 2012, hydrocarbon output has suffered from a steady stream of political and militia actions delayed production efforts or halted them outright. Across the post-Arab Spring landscape, groups realized that if you wanted the government to listen, targeting oil and gas facilities was a good place to start.

After reaching pre-conflict output levels of about 1.5-1.6 million barrels per day in December 2012, Libya’s output has been battered down to just 200,000 bpd earlier this year as a result of ongoing unrest. According to a Reuters report, output currently stands at about 600,000 bpd.

The steady wave of reports detailing plant shutdowns and facility occupations was enough to give giants like Italy’s Eni and Marathon pause – a point driven home with the loss of billions in potential revenue as a result of the closures. Like companies across North Africa’s energy landscape, Libya’s challenges were enough to make companies reconsider their presence in the region. Sure there were billions to be made, but were the risks worth the pay-off?

While the protests and closings continue, it appears that for a few firms, the answer is yes. This week saw reports from Spain’s Repsol, Austria’s OMV and France’s TotalTotal, detailing a new discovery about 500 miles south of the Libyan capital of Tripoli. According to an Associated Press report, the well has produced positive oil flow after initial tests and represents the third of eight wells Repsol has planned for the country.

While modest in the context of the country’s broader potential, the discovery does allow a bit of confidence for an energy sector in need of it. Libya boasts Africa’s largest reserves of crude, but has suffered from underdevelopment over the last thirty years due to diplomatic and economic isolation. The result has been underutilized local potential, made worse by a dearth of infrastructure investment. There was some hope that the resumption of diplomatic relations between the US and Libya in 2007 would kickstart the country’s energy sector, helping it return to the production highs of the 1970s, but since then, their recovery has been an uneven one.

Even without the presence of Muammar Gaddafi, the country’s ability to attract and retain needed foreign production partners has suffered alongside the region’s largest energy actors in a post-Arab Spring world. In neighboring Algeria, a direct attack on a BPBP-StatoilStatoil owned gas facility near the Libyan border has forced a reassessment of activity in the region. Even though the country’s political leadership has pledged swift and consistent action against anyone who threatens their energy supply, Libya has faced a similar response.

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